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Air India will only be the third local carrier after IndiGo and GoAir to operate A320 neos. Photo: Ramesh Pathania/Mint

New Delhi: Air India Ltd is all set to take delivery of its first more fuel-efficient A320 neo aircraft in January next year.

As it works on ways to turn around its fortunes, the airline is looking to ramp up the fleet with more fuel-efficient A320 neo (new engine option) planes. The national airline will only be the third local carrier after IndiGo (Interglobe Aviation Ltd) and GoAir to operate A320 neos.

Air India CMD Ashwani Lohani on Friday said two neos will be coming in January 2017. In March this year, Air India signed a pact with the Kuwait-based ALAFCO for leasing 14 A320 neos and the delivery of these planes is to start from early next year.

Further, in June, the carrier had sought bids for dry leasing of seven new A320 neos for up to 12 years. Currently, the Air India group has a fleet of around 135 planes, including nearly 70 from Airbus. Four classic A320s of the total 15 aged aircraft are expected to be moved out of the fleet in 2016-17. The remaining ones will be phased out in a time-bound manner over the next 2-3 years.

IndiGo and GoAir fly A320 neos on domestic routes. After turning operationally profitable in the last fiscal, Air India posted an operational loss of Rs246.14 crore in the latest April-June quarter.

The operating loss in the first quarter of this financial year has come down from Rs315.37 crore in the year-ago period. Various steps such as rationalisation of certain loss making routes, closure of overseas offline offices at certain locations, phasing out of old fleet and consequential reduction in maintenance costs have been initiated to reduce the airline’s losses.

For the first time in nearly a decade, Air India reported an operating profit of Rs105 crore in the last fiscal. On Thursday, minister of state for civil aviation Jayant Sinha told the Lok Sabha that the airline has been facing losses in the past few years on account of a multitude of factors. These include high interest burden and airport user charges, adverse impact of exchange rate due to weakening of the rupee, increase in competition, especially from low cost carriers and liberalised bilaterals to foreign airlines.